**America’s FX News Wrap: USD Slips Toward Weekly Lows, Equities Continue Higher**
*Adapted from original reporting by Adam Button, ForexLive / TradingView*
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The US dollar continued to drift lower at the end of the week, extending a broader recent trend that’s shaped global forex markets in the post-Thanksgiving period. Major currency pairs printed new highs against the greenback, while equity markets in the United States logged further gains. Below, we analyze the session’s major developments, unravel technical and fundamental drivers, and spotlight implications into December.
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## US Dollar Slides Further as Yield Decline Deepens
The story of the week for forex traders remains the concerted, broad-based drop in the US dollar. This followed a pullback in Treasury yields as markets grappled with prospective changes to Federal Reserve policy and signs the US economy may be cooling after a period of resilience.
### Key Movements during the Session
– **EUR/USD**: Rose as high as 1.0947, closing just under that mark, notching a fresh 3-month high for the common currency.
– **USD/JPY**: Fell beneath 148.00, continuing its decline after breaking significant support in the previous sessions.
– **GBP/USD**: Advanced above 1.2600, printing a new two-month peak.
– **AUD/USD**: Hovered above 0.6600, achieving its highest close since August.
– **DXY Dollar Index**: Ended the week near 103.25, more than 3 percent off the year’s November highs.
### What’s Behind the Decline?
– **Interest Rates:** The drop in Treasury yields—10-year notes fell below 4.40 percent—sparked dollar weakness, signaling markets are wagering that US rates have likely peaked.
– **Fed Expectations:** Futures now price in a nearly 70 percent chance of a cut by May 2024. The narrative of “peak rates” is solidifying.
– **Risk Appetite:** The dollar’s retreat coincided with a rally in stocks and risk-sensitive assets, as softening inflation and labor data suggest a gentler landing for the US economy.
– **Global Central Banks:** Action and messaging from the European Central Bank and Bank of England have indicated rate pauses, but not imminent cuts, giving their currencies a moderate lift versus the dollar.
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## Stock Market Surge Continues: S&P 500 Approaches New Highs
Wall Street’s bullish sentiment is proving persistent. In the holiday-shortened trading week, the S&P 500 and Nasdaq each rose significantly, reflecting optimism in soft-landing prospects. Technology stocks, in particular, led the gains.
### Key Benchmarks:
– **S&P 500:** Rose 0.5 percent on Friday, now just 2 percent below its all-time high.
– **Nasdaq Composite:** Logged a notable 0.8 percent gain, driven by tech names.
– **Dow Jones Industrial Average:** Higher by 0.3 percent, less dramatic but extending a solid multi-week advance.
### Driving Forces:
– **Lower Yields:** Cheaper borrowing costs increase the appeal of equity markets over fixed income.
– **Economic Data:** Durable goods orders and jobless claims came in close to expectations, reinforcing the idea of decelerating—not contracting—growth.
– **Earnings Momentum:** Retailers wrapped up earnings season with results that calmed fears of a consumer pullback.
– **Seasonal Flows:** November is historically a bullish month; 2023 is proving to be no different, with asset managers rebalancing toward risk for year-end.
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## Detailed Currency Analysis
The relative performance of currencies at week’s end is notable not only for the dollar’s decline, but also for potential medium-term reversals in several major pairs.
### EUR/USD
– Broke decisively above the 1.0900 handle on a combination of dollar weakness and positioning
Read more on GBP/USD trading.